Exhibit 4.64
Bank of America Business Loan Agreement
National Trust and Savings Association
This Agreement dated as of February 15, 1996, is between Bank of America
National Trust and Savings Association (the "Bank") and ▇▇▇▇ Company (the
"Borrower").
1. FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS
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1.1 LINE OF CREDIT AMOUNT.
(a) During the availability period described below, The Bank will provide
a line of credit ( the "Facility No. 1") to the Borrower. The amount
of the line of credit (the "Facility No. 1 Commitment") is Fifteen
Million Dollars ($15,000,000).
(b) This is a revolving line of credit with a within line facility for
letters of credit. During the availability period, the Borrower may
repay principal amounts and reborrow them.
(c) The Borrower agrees not to permit the outstanding principal balance of
the line of credit plus the outstanding amounts of any letters of
credit, including amounts drawn on letters of credit and not yet
reimbursed to exceed the Facility No. 1 Commitment.
1.2 AVAILABILITY PERIOD.
The line of credit is available between the date of this Agreement and June 1,
1998 (the "Facility No. 1 Expiration Date") unless the Borrower is in default.
1.3 INTEREST RATE.
(a) Unless the Borrower elects an optional interest rate as described
below, the interest rate is the Bank's Reference Rate.
(b) The Reference Rate is the rate of interest publicly announced from
time to time by the Bank in San Francisco, California, as its
Reference Rate The Reference Rate is set by The Bank based on various
factors, including the Bank's costs and desired return, general
economic conditions and other factors, and is used as a reference
point for pricing some loans. The Bank may price loans to its
customers at, above, or below the Reference Rate. Any change in the
Reference Rate shall take effect at the opening of business on the day
specified in the public announcement of a change in the Bank's
Reference Rate.
1.4 REPAYMENT TERMS.
(a) The Borrower will pay interest on the Facility No. 1 on March 1,1996,
and then monthly thereafter until payment in full of any principal
outstanding under this line of credit.
(b) The Borrower will repay in full all principal and any unpaid interest
or other charges outstanding under this line of credit no later than
the Expiration Date.
(c) Any amount bearing interest at an optional interest rate (as described
below) may be repaid at the end of the applicable interest period,
which shall be no later than the Expiration Date.
1.5 OPTIONAL INTEREST RATES.
Instead of the interest rate based on the Bank's Reference Rate, the Borrower
may elect to have all or portions of the line of credit (during the availability
period) bear interest at the rate(s) described below during an interest period
agreed to by the Bank and the Borrower. Each interest rate is a rate per year.
Interest will be paid on the last day of each interest period, end, if the
interest period is longer than thirty days (30), then on the first day each
month during the interest period. At the end of any interest
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period, the interest rate will revert to the rate based on the Reference Rate,
unless the Borrower has designated another optional interest rate for the
portion.
1.6 OFFSHORE RATE.
The Borrower may elect to have all or portions of the principal balance of the
line of credit bear interest at the Offshore Rate plus one and seven-eighths
(1.875) percentage points.
Designation of an Offshore Rate portion is subject to the following
requirements:
(a) The interest period during which the Offshore Rate will be in effect
will be no shorter than 30 days and no longer than one year. The last
day of the interest period will be determined by the Bank using the
practices of the offshore dollar inter-bank market;
(b) Each Offshore Rate portion will be for an amount not less than Five
Hundred Thousand Dollars ($500,OOO).
(c) The "Offshore Rate" means the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one percent.
(All amounts in the calculation will be determined by the Bank as of
the first day of the interest period.)
Offshore Rate = GRAND CAYMAN RATE
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(1.00- Reserve Percentage)
Where,
(i) "Grand Cayman Rate" means the interest rate (rounded upward
to the nearest 1/16th of one percent) at which the Bank's
Grand Cayman Branch, Grand Cayman, British West Indies,
would offer U.S. dollar deposits for the applicable interest
period to other major banks in the offshore dollar
inter-bank markets.
(ii) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by
member banks of the Federal Reserve System for Eurocurrency
Liabilities, as defined in the Federal Reserve Board
Regulation D, rounded upward to the nearest 1/100 of one
percent. The percentage will be expressed as a decimal, and
will include, but not be limited to, marginal, emergency,
supplemental, special, and other reserve percentages.
(d) The Borrower may not elect an Offshore Rate with respect to any
portion of the principal balance of the line of credit which is
scheduled to be repaid before the last day of the applicable interest
period.
(e) Any portion of the principal balance of the line of credit already
bearing interest at the Offshore Rate will not be converted to a
different rate during its interest period.
(f) Each prepayment of an Offshore Rate portion, whether voluntary, by
reason of acceleration or otherwise, will be accompanied by the amount
of accrued interest on the amount prepaid, and a prepayment fee equal
to the amount (if any) by which
(i) the additional interest which would have been payable on the
amount prepaid had it not been paid until the last day of
the interest period, exceeds
(ii) the interest which would have been recoverable by the Bank
by placing the amount prepaid on deposit in the offshore
dollar market for a period starting on the date on which it
was prepaid and ending on the last day or the interest
period of such portion.
(g) The Bank will have no obligation to accept an election for an Offshore
Rate portion if any of the following described events has occurred and
is continuing:
(i) Dollar deposits in the principal amount, and for periods
equal to the interest period, of an Offshore Rate portion
are not available in the offshore dollar inter-bank markets;
or
(ii) the Offshore Rate does not accurately reflect the cost of an
Offshore Rate portion.
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1.7 LETTERS OF CREDIT.
This line of credit may be used for financing:
(i) standby letters of credit with a maximum maturity not to
extend beyond the Expiration Date.
(ii) The amount of the letters of credit outstanding at any one
time, (including amounts drawn on letters of credit and not
yet reimbursed), and standby letters of credit may not
exceed One Million Dollars ($1,000,000).
The Borrower agrees:
(a) any sum drawn under a letter of credit may, at the option of the Bank,
be added to the principal amount outstanding under this Agreement. The
amount will bear interest and be due as described elsewhere in this
Agreement,
(b) if there is a default under this Agreement, to immediately prepay and
make the Bank whole for any outstanding letters of credit.
(c) the issuance of any letter of credit and any amendment to a letter of
credit is subject to the Bank's written approval and must be in form
and content satisfactory to the Bank and in favor of a beneficiary
acceptable to the Bank. Without limiting the foregoing, no letter of
credit may be issued to support any obligation of the Borrower in
connection with worker's compensation laws or that contains a
provision providing that the maturity date will be automatically
extended each year for an additional year unless the Bank gives
written notice to the contrary.
(d) to sign the Bank's form Application and Agreement for Standby Letter
of Credit.
(e) to pay any issuance and/or other fees that the Bank notifies the
Borrower will be charged for issuing and processing letters of credit
for the Borrower.
(f) to allow the Bank to automatically charge its checking account for
applicable fees, discounts, and other charges.
2. FACILITY NO. 2: TERM LOAN AMOUNT AND TERMS
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2.1 LOAN AMOUNT.
The Bank agrees to provide a term loan to the Borrower (the "Facility No. 2") in
an amount of up to Two Million Three Hundred Thousand Dollars ($2,300,000) (the
"Facility No. 2 Commitment").
2.2 AVAILABILITY PERIOD.
The loan is available in one disbursement from the Bank between the date of this
Agreement and September 1, 1996, unless the Borrower is in default.
2.3 INTEREST RATE.
(a) Unless the Borrower elects an optional interest rate as described
below, the Facility No. 2 interest rate is the Bank's Reference Rate
plus one quarter (.25%) of a percentage point.
2.4 REPAYMENT TERMS.
(a) The Borrower will pay all accrued but unpaid interest on the earlier
of (i) the first day of the first month following the advance of
proceeds under Facility No. 2, or (ii) October 1,1996, and then
monthly thereafter and upon payment in full of the principal of the
loan.
(b) The Borrower will repay principal of the term loan in fifty-nine (59)
successive monthly installments, each equal to 1/120th of the original
amount of the term loan, starting October 1, 1996. On September 1,
2001, the Borrower will repay the remaining principal balance plus any
interest then due.
(c) Any amount bearing interest at an optional interest rate (as described
below) may be repaid at the end of the applicable interest period,
which shall be no later than the Expiration Date.
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(d) The Borrower may prepay the loan in full or in part at any time. The
prepayment will be applied to the most remote installment of principal
due under this Agreement.
2.5 OPTIONAL INTEREST RATES.
Instead of the interest rate based on the Bank's Reference Rate, the Borrower
may elect to have all or portions of the loan bear interest at the rate(s)
described below during an interest period agreed to by the Bank and the
Borrower. Each interest rate is a rate per year. Interest will be paid on the
last day of each interest period, and, if the interest period is longer than 30
days then on the last day each month during the interest period. At the end of
any interest period, the interest rate will revert to the rate based on the
Reference Rate, unless the Borrower has designated another optional interest
rate for the portion.
2.6 OFFSHORE RATE.
The Borrower may elect to have all or portions of the principal balance of the
loan bear interest at the Offshore Rate plus two and one-quarter (2.25%)
percentage points.
Designation of an Offshore Rate portion is subject to the following
requirements:
(a) The interest period during which the Offshore Rate will be in effect
will be no shorter than 90 days end no longer than one year. The last
day of the interest period will be determined by the Bank using the
practices of the offshore dollar inter-bank market.
(b) Each Offshore Rate portion will be for an amount not less than Five
Hundred Thousand Dollars ($500,000).
(c) The "Offshore Rate" means the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one percent.
(All amounts in the calculation will be determined by the Bank as of
the first day of the interest period.)
Offshore Rate = GRAND CAYMAN RATE
-------------------------
(1.00 - Reserve Percentage)
Where,
(i) "Grand Cayman Rate" means the interest rate (rounded upward
to the nearest 1/16th of one percent) at which the Bank's
Grand Cayman Branch, Grand Cayman, British West Indies,
would offer U.S. dollar deposits for the applicable interest
period to other major banks in the offshore dollar
inter-bank market.
(ii) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by
member banks of the Federal Reserve System for Eurocurrency
Liabilities, as defined in the Federal Reserve Board
Regulation D, rounded upward to the nearest 1/100 of one
percent. The percentage will be expressed as a decimal, and
will include, but not be limited to, marginal, emergency,
supplemental, special, and other reserve percentages.
(d) The Borrower may not elect an Offshore Rate with respect to any
portion of the principal balance of the loan which is scheduled to be
repaid before the last day of the applicable interest period.
(e) Any portion of the principal balance of the loan already bearing
interest at the Offshore Rate will not be converted to a different
rate during its interest period.
(f) Each prepayment of an Offshore Rate portion, whether voluntary, by
reason of acceleration or otherwise, will be accompanied by the amount
of accrued interest on the amount prepaid; and a prepayment fee equal
to the amount (if any) by which
(i) the additional interest which would have been payable on the
amount prepaid had ft not been paid until the last day of
the interest period, exceeds
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(ii) the interest which would have been recoverable by the Bank
by placing the amount prepaid on deposit in the offshore
dollar market for a period starting on the date on which it
was prepaid and ending on the last day of the interest
period for such portion.
(g) The Bank will have no obligation to accept an election for an Offshore
Rate portion if any of the following described events has occurred and
is continuing:
(i) Dollar deposits in the principal amount, and for periods
equal to the interest period, or an Offshore Rate portion
are not available in the offshore dollar inter-bank markets;
or
(ii) the Offshore Rate does not accurately reflect the cost of an
Offshore Rate portion.
3. EXPENSES
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3.1 EXPENSES.
(a) The Borrower agrees to reimburse the Bank for any expenses it incurs
in the preparation of this Agreement and any agreement or instrument
required by this Agreement. Expenses include, but are not limited to,
reasonable attorneys' fees, including any allocated costs of the
Bank's in-house counsel.
(b) The Borrower agrees to reimburse the Bank for the cost of periodic
audits and appraisals of the personal property collateral securing
this Agreement, at such intervals as the Bank may reasonably require.
The audits and appraisals may be per formed by employees of the Bank
or by independent appraisers.
4. COLLATERAL
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4.1 PERSONAL PROPERTY.
The Borrower's obligations to the Bank under this Agreement will be scoured by
personal property the Borrower now owns or will own in the future as listed
below. The collateral is further defined in security agreement(s) executed by
the Borrower. In addition, all personal property collateral securing this
Agreement shall also secure all other present and future obligations of The
Borrower to the Bank (excluding any consumer credit covered by the Federal Truth
in Lending law, unless the Borrower has otherwise agreed in writing). All
personal property collateral securing any other present or future obligations of
the Borrower to The Bank shall also secure this Agreement.
(a) Inventory.
(b) Receivables.
5. DISBURSEMENTS, PAYMENTS AND COSTS
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5.1 REQUESTS FOR CREDIT.
Each request for an extension of credit will be made in writing in a manner
acceptable to the Bank, or by another means acceptable to the Bank.
5.2 DISBURSEMENTS AND PAYMENTS.
Each disbursement by the Bank and each payment by the Borrower will be:
(a) made at the Bank's branch (or other location) selected by the Bank
from time to time;
(b) made for the account of the Bank's branch selected by the Bank from
time to time;
(c) made in immediately available funds, or such other type of funds
selected by the Bank;
(d) evidenced by records kept by the Bank. In addition, the Bank may, at
its discretion, require the Borrower to sign one or more promissory
notes.
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5.3 TELEPHONE AUTHORIZATION.
(a) The Bank may honor telephone instructions for advances or repayments
or for the designation of optional interest rates given by any one of
the individuals authorized to sign loan agreements on behalf of the
Borrower, or any other individual designated by any one of such
authorized signers.
(b) Advances will be deposited in and repayments will be withdrawn from
the Borrower's account number 14576-50027, or such other of the
Borrower's accounts with the Bank as designated in writing by the
Borrower.
(c) The Borrower indemnifies and excuses the Bank (including its officers,
employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone instructions it
reasonably believes are made by any individual authorized by the
Borrower to give such instructions. This indemnity and excuse will
survive this Agreement.
5.4 DIRECT DEBIT.
(a) The Borrower agrees that interest and principal payments and any fees
will be deducted automatically on the due date from checking account
number 14576-50027.
(b) The Bank will debit the account on the dates the payments become due.
If a due date does not fall on a banking day, the Bank will debit the
account on the first banking day following the due date.
(c) The Borrower will maintain sufficient funds in the account on the
dates the Bank enters debits authorized by this Agreement. If there
are insufficient funds in the account on the date the Bank enters any
debit authorized by this Agreement, the debt will be reversed.
5.5 BANKING DAYS.
Unless otherwise provided in this Agreement, a banking day is a day other than a
Saturday or a Sunday on which the Bank is open for business in California. For
amounts bearing interest at an offshore rate (if any), a banking day is a day
other than a Saturday or a Sunday on which the Bank is open for business in
California and dealing in offshore dollars. All payments and disbursements which
would be due on a day which is not a banking day will be due on the next banking
day. All payments received on a day which is not a banking day will be applied
to the credit on the next banking day.
5.6 TAXES.
The Borrower will not deduct any taxes from any payments it makes to the Bank.
If any government authority imposes any taxes on any payments made by the
Borrower, the Borrower will pay the taxes and will also pay to the Bank, at the
time interest is paid, any additional amount which the Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
taxes had not bean imposed. Upon request by the Bank, the Borrower will confirm
that it has paid the taxes by giving the Bank official tax receipts (or
notarized copies) within 30 days after the due date. However, the Borrower will
not pay the Bank's net income taxes.
5.7 INTEREST CALCULATION.
Except as otherwise stated in this Agreement, all interest and fees, if any,
will be computed on the basis of a 360-day year and the actual number of days
elapsed. This results in more interest or a higher fee than if a 365-day year is
used.
5.8 INTEREST ON LATE PAYMENTS.
At the Bank's sole option in each instance, any amount not paid when due under
this Agreement (including interest) shall bear interest from the due date at the
Bank's Reference Rate plus one (1.0%) percentage point. This may result in
compounding of interest.
5.9 DEFAULT RATE.
Upon the occurrence and during the continuation of any default under this
Agreement, advances under this Agreement will at the option of the Bank bear
interest at a rate per annum which is two (2.0%) percentage points higher than
the rate of interest otherwise provided under this Agreement. This will not
constitute a waiver of any default.
6. CONDITIONS
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The Bank must receive the following items, in form and content acceptable to the
Bank, before it is required to extend any credit to the Borrower under this
Agreement:
6.1 AUTHORIZATIONS.
Evidence that the execution, delivery and performance by the Borrower (and any
guarantor) of this Agreement and any instrument or agreement required under this
Agreement have been duly authorized.
6.2 SECURITY AGREEMENTS.
Signed original security agreements, assignments, financing statements and
fixture filings, together with collateral in which the Bank requires a
possessory security interest which the Bank requires.
6.3 EVIDENCE OF PRIORITY.
Evidence that security interests and liens in favor of the Bank are valid,
enforceable, and prior to all others' rights and interests, except those the
Bank consents to in writing.
6.4 INSURANCE.
Evidence of insurance coverage, as required in the "Covenants" section of this
Agreement.
6.5 ABL AUDIT.
Satisfactory report on the results of an audit or review scheduled and performed
by the Bank's Asset Based Lending Department.
6.6 OTHER ITEMS.
Any other items that the Bank reasonably requires.
7. REPRESENTATIONS AND WARRANTIES
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When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following9 representations and warranties, Each request
for an extension of credit constitutes a renewed representation,
7.1 ORGANIZATION OF BORROWER.
The Borrower is a corporation duly formed and existing under the laws of the
state where organized.
7.2 AUTHORIZATION.
This Agreement, and any instrument or agreement required hereunder, are within
the Borrower's powers, have been duly authorized, and do not conflict with any
of its organizational papers.
7.3 ENFORCEABLE AGREEMENT.
This Agreement is a legal, valid and binding agreement of the Borrower,
enforceable against the Borrower in accordance with its terms, and any
instrument or agreement required hereunder, when executed and delivered, will be
similarly legal, valid, binding and enforceable.
7.4 GOOD STANDING.
In each state in which the Borrower does business, it is properly licensed, in
good standing, and, where required, in compliance with fictitious name statutes.
7.5 NO CONFLICTS.
This Agreement does not conflict with any law, agreement, or obligation by which
the Borrower is bound.
7.6 FINANCIAL INFORMATION.
All financial and other information that has been or will be supplied to the
Bank, including the Borrower's financial statement dated as of November 30,
1995, is:
(a) sufficiently complete to give the Bank accurate knowledge of
the Borrower's (and any guarantor's) financial condition.
(b) in form and content required by the Bank,
(a) in compliance with all government regulations that apply.
7.7 LAWSUITS.
There is no lawsuit, tax claim or other dispute pending or threatened against
the Borrower, which, if lost, would impair the Borrower's financial condition or
ability to repay the loan, except as have been disclosed in writing to the Bank.
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7.8 COLLATERAL.
All collateral required in this Agreement is owned by the grantor of the
security interest free of any title defects or any liens or interests of others.
7.9 PERMITS, FRANCHISES.
The Borrower possesses all permits, memberships, franchises, contracts and
licenses required and all trademark rights, trade name rights, patent rights and
fictitious name rights necessary to enable it to conduct the business in which
it is now engaged.
7.10 OTHER OBLIGATIONS.
The Borrower is not in default on any obligation for borrowed money, any
purchase money obligation or any other material lease, commitment, contract,
instrument or obligation.
7.11 INCOME TAX RETURNS.
The Borrower has no knowledge of any pending assessments or adjustments of its
income tax for any year.
7.12 NO EVENT OF DEFAULT.
There is no event which is, or with notice or lapse of time or both would be, a
default under this Agreement.
7.13 ERAS Plans.
(a) The Borrower has fulfilled its obligations, if any, under the minimum
funding standards of ERISA and the Code with respect to each Plan and
is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code, and has not incurred any
liability with respect to any Plan under Title IV of ERISA.
(b) No reportable event has occurred under Section 4043(b) of ERISA for
which the PBGC requires 30 day notice.
(c) No action by the Borrower to terminate or withdraw from any Plan has
been taken and no notice of intent to terminate a Plan has been filed
under Section 4041 of ERISA.
(d) No proceeding has been commenced with respect to a Plan under Section
4042 of ERISA, and no event has occurred or condition exists which
might constitute grounds for the commencement of such a proceeding.
(e) The following terms have the meanings indicated for purposes of this
Agreement:
(i) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(ii) "ERISA" means the Employee Retirement Income Act of 1974, as
amended from time to time.
(iii) "PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
(iv) "Plan" means any employee pension benefit plan maintained or
contributed to by the Borrower and insured by the Pension
Benefit Guaranty Corporation under Title IV of ERISA.
7.14 LOCATION OF BORROWER.
The Borrower's place of business (or, if the Borrower has more than one place of
business, its chief executive office) is located at the address listed under the
Borrower's signature on this Agreement.
8. COVENANTS
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The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:
8.1 USE OF PROCEEDS.
To use the proceeds of the Facility No. 1 for working capital purposes including
the issuance of stand-by letters of credit; and the proceeds of Facility No. 2
for the refinancing of industrial revenue bonds in ▇▇▇▇▇ Springs, Mississippi.
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8.2 FINANCIAL INFORMATION.
To provide the following financial information and statements and such
additional information as requested by the Bank from time to time:
(a) Within 120 days of the Borrower's fiscal year end, the Borrower's
annual financial statements. These financial statements must be
audited (with an unqualified opinion) by a Certified Public Accountant
("CPA") acceptable to the Bank. The statements shall be prepared on a
consolidated and consolidating basis.
(b) Within 30 days of the period's end, the borrowers quarterly financial
statements. Those financial statements may be Borrower prepared. The
statements shall be prepared on a consolidated and consolidating
basis.
(c) Copies of the Borrower's Form 10-K Annual Report, Form 10-Q Quarterly
Report and Form 8-K Current Report within 15 days after the date of
filing with the Securities and Exchange Commission.
(d) Within 120 days of the Borrower's fiscal year end, the Borrower's
annual revised three year strategic plan.
8.3 QUICK RATIO.
To maintain on a consolidated basis a ratio of quick assets to current
liabilities of at least .70:1.0, to be measured quarterly.
"Quick assets" means cash, short-term cash investments, net trade receivables,
marketable securities not classified as long-term investments.
8.4 TOTAL LIABILITIES TO TANGIBLE NET WORTH RATIO.
To maintain on a consolidated basis a ratio of total liabilities to tangible net
worth not exceeding the amounts indicated for each period specified below, to be
measured quarterly:
Period RATIO
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From the date hereof through
December 30, 1996 1.50:1.0
From December 31, 1996 and thereafter 1,25:1.0
"Total liabilities" means the sum of current liabilities plus long term
liabilities.
"Tangible net worth" means the gross book value of the Borrower's assets
(excluding goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and expense, deferred research and
development costs, deferred marketing expenses, and other like intangibles less
total liabilities, including but not limited to accrued and deferred income
taxes, and any reserves against assets.
8.5 FIXED CHARGE COVERAGE RATIO.
To maintain on a consolidated basis a Fixed Charge Coverage Ratio of at least
1,35:1.0, to be measured quarterly.
"Fixed Charge Coverage Ratio" means the ratio of the sum of net income before
taxes, plus interest expense, depreciation and amortization to the sum of
interest expense, taxes paid, the current portion of long-term debt, capital
expenditures and dividends. This ratio will be calculated at the end of each
fiscal quarter, using the results of that quarter and each of the 3 immediately
preceding quarters. The current portion of long term debt will be measured as of
the last day of the preceding fiscal year.
8.6 NET DOMESTIC SHAREHOLDER EQUITY.
To maintain on a consolidated basis a net domestic shareholder equity of at
least Ten Million Five Hundred Thousand Dollars ($10,500,000), to be measured
quarterly.
"Net Domestic Shareholder Equity " means the domestic shareholder equity less
investments in subsidiaries and less accounts receivable from subsidiaries.
8.7 LIMITATION ON LOSSES.
Not incur any net loss before taxes and extraordinary items in any two
consecutive fiscal quarters.
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8.8 OTHER DEBTS.
Not to have outstanding or incur any direct or contingent debts or lease
obligations (other than those to the Bank), or become liable for the debts of
others without the Bank's written consent. This does not prohibit
(a) Acquiring goods, supplies, or merchandise on normal trade credit.
(b) Endorsing negotiable instruments received in the usual course of
business.
(c) Obtaining surety bonds in the usual course of business.
(d) Debts and lines of credit in existence on the date of this Agreement
disclosed in writing to the Bank including.
(e) Debts for insurance premiums in an aggregate principal amount at any
one time outstanding not to exceed Eight Hundred Thousand Dollars
($800,000).
(f) Debts to acquire fixed or capital assets in an amount not to exceed
Seven Hundred Fifty Thousand Dollars ($750,000) in any single fiscal
year.
(g) Debts (other than those permitted under subsections (a) through (f)
above) in an aggregate principal amount at any one time outstanding
not to exceed One Hundred Thousand Dollars ($100,000).
8.9 OTHER LIENS.
Not to create, assume, or allow any security interest or lien (including
judicial liens) on property the Borrower now or later owns, except:
(a) Deeds of trust and security agreements in favor of the Bank.
(b) Liens for taxes not yet due.
(c) Liens outstanding on the date of this Agreement disclosed in writing
to the Bank.
8.10 NEGATIVE PLEDGE OTHER REAL PROPERTY.
Not to create, assume, or allow any security interest or lien (including
judicial liens) on real property the Borrower now or later owns, including but
not limited to the real properly located at the following addresses:
REAL PROPERTY ADDRESSES
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
1815 - ▇▇▇▇ ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇-▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
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8.11 NOTICES TO BANK.
To promptly notify the Bank in writing of:
(a) any lawsuit over One Million Dollars ($1,000,000) against the Borrower
(or any guarantor).
(b) any substantial dispute between the Borrower (or any guarantor) and
any government authority.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the Borrower's (or any guarantor's)
financial condition or operations.
(e) any change in the Borrower's name, legal structure, place of business,
or chief executive office if the Borrower has more than one place of
business.
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8.12 BOOKS AND RECORDS.
To maintain adequate books and records.
8.13 AUDITS.
To allow the Bank and its agents to inspect the Borrower's properties and
examine, audit and make copies of books and records at any reasonable time. If
any of the Borrower's properties, books or records are in the possession of a
third party, the Borrower authorizes that third party to permit the Bank or its
agents to have access to perform inspections or audits and to respond to the
Bank's requests for information concerning such properties, books and records.
8.14 COMPLIANCE WITH LAWS.
To comply with the laws (including any fictitious name statute), regulations,
and orders of any government body with authority over the Borrower's business.
8.15 PRESERVATION OF RIGHTS.
To maintain and preserve all rights, privileges, and franchises the Borrower now
has.
8.16 MAINTENANCE OF PROPERTIES.
To make any repairs, renewals, or replacements to keep the Borrower's properties
in good working condition.
8.17 PERFECTION OF LIENS.
To help the Bank perfect and protect its security interests and liens, and
reimburse it for related costs it incurs to protect its security interests and
liens.
8.18 COOPERATION. To take any action requested by the Bank to carry out
the intent of this Agreement.
8.19 INSURANCE.
(a) Insurance Covering Collateral. To maintain all risk property damage
insurance policies covering the tangible property comprising the
collateral. Each insurance policy must be for the full replacement
cost of the collateral and include a replacement cost endorsement. The
insurance must be issued by an insurance company acceptable to the
Bank end must include a lender's loss payable endorsement in favor of
the Bank in a form acceptable to the Bank.
(b) General Business Insurance. To maintain insurance satisfactory to the
Bank as to amount, nature and carrier covering property damage
(including loss of use and occupancy) to any of the Borrower's
properties, public liability insurance including coverage for
contractual liability, product liability and workers' compensation,
and any other insurance which is usual for the Borrower's business.
(c) Evidence of Insurance. Upon the request of the Bank, to deliver to the
Bank a copy of each insurance policy, or, if permitted by the Bank, a
certificate of insurance listing all insurance in force.
8.20 ADDITIONAL NEGATIVE COVENANTS.
Not to, without the Bank's written consent:
(a) engage in any business activities substantially different from the
Borrower's present business.
(b) liquidate or dissolve the Borrower's business.
(c) enter into any consolidation, merger, pool, joint venture, syndicate,
or other combination.
(d) lease, or dispose of all or a substantial part of the Borrower's
business or the Borrower's assets.
(e) acquire or purchase a business or its assets for a consideration,
including assumption of debt, if the business or the assets to be
acquired are for a business which is not in the same line of business
as the Borrower.
(f)) sell or otherwise dispose of any assets for less than fair market
value, or enter into any sale and leaseback agreement covering any of
its fixed or capital assets.
8.21 ERISA PLANS. To give prompt written notice to the Bank of:
11
(a) The occurrence of any reportable event under Section 4043(b) of ERISA
for which the PBGC requires 30 day notice.
(b) Any action by the Borrower to terminate or withdraw from a Plan or the
filing of any notice of intent to terminate under Section 4041 of
ERISA.
(c) Any notice of noncompliance made with respect to a Plan under Section
4041(b) of ERISA.
(d) The commencement of any proceeding with respect to a Plan under
Section 4042 of ERISA.
9. HAZARDOUS WASTE INDEMNIFICATION
-- -------------------------------
The Borrower will indemnify and hold harmless the Bank from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. This indemnity will apply whether
the hazardous substance is on, under or about the Borrower's property or
operations or property leased to the Borrower. The indemnity includes but is not
limited to attorneys' fees (including the reasonable estimate of the allocated
coat of in-house counsel and staff). The indemnity extends to the Bank, its
parent, subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns. For these purposes, the term "hazardous
substances" means any substance which is or becomes designated as "hazardous" or
'toxic" under any federal, state or local law, This indemnity will survive
repayment of the Borrower's obligations to the Bank.
10. DEFAULT
--- -------
If any of the following events occur, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional credit
available to the Borrower, and require the Borrower to repay its entire debt
immediately and without prior notice. If an event of default occurs under the
paragraph entitled "Bankruptcy," below, with respect to the Borrower, then the
entire debt outstanding under this Agreement will automatically be due
immediately.
10.1 FAILURE TO PAY.
The Borrower fails to make a payment under this Agreement when due.
10.2 LIEN PRIORITY.
The Bank fails to have an enforceable first lien (except for any prior liens to
which the Bank has consented in writing) on or security interest in any property
given as security for this loan.
10.3 FALSE INFORMATION.
The Borrower has given the Bank false or misleading information or
representations.
10.4 BANKRUPTCY.
The Borrower (or any guarantor) files a bankruptcy petition, a bankruptcy
petition is filed against the Borrower (or any guarantor), or the Borrower (or
any guarantor) makes a general assignment for the benefit of creditors.
10.5 RECEIVERS.
A receiver or similar official is appointed for the Borrower's (or any
guarantor's) business, or the business is terminated.
10.6 GOVERNMENT ACTION.
Any government authority takes action that the Bank believes materially
adversely affects the Borrower's (or any guarantor's) financial condition or
ability to repay.
10.7 MATERIAL ADVERSE CHANGE.
A material adverse change occurs in the Borrower's (or any guarantor's)
financial condition, properties or prospects, or ability to repay the loan.
10.8 CROSS-DEFAULT.
Any default occurs under any agreement in connection with any credit the
Borrower (or any guarantor) has obtained from anyone else or which the Borrower
(or any guarantor) has guaranteed.
10.9 DEFAULT UNDER RELATED DOCUMENTS.
Any guaranty, subordination agreement, security agreement, or other document
required by this Agreement is violated of no longer in effect.
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10.10 OTHER BANK AGREEMENTS.
The Borrower (or any guarantor) fails to meet the conditions of, or fails to
perform any obligation under any other agreement the Borrower (or any guarantor)
has with the Bank or any affiliate of the Bank.
10.11 ERISA PLANS.
To give prompt written notice to the Bank of:
(a) The occurrence of any reportable event under Section 4043(b) of ERISA
for which the PBGC requires 30 day notice.
(h) Any action by the Borrower to terminate or withdraw from a Plan or the
filing of any notice of intent to terminate under Section 4041 of
ERISA.
(c) Any notice of noncompliance made with respect to a Plan under Section
4041(b) of ERISA.
(d) The commencement of any proceeding with respect to a Plan under
Section 4042 of ERISA.
10.12 OTHER BREACH UNDER AGREEMENT.
The Borrower fails to meet the conditions of, or fails to perform any obligation
under, any term of this Agreement not specifically referred to in this Article.
11. ENFORCING THIS AGREEMENT; MISCELLANEOUS
--- ---------------------------------------
11.1 GAAP.
Except as otherwise stated in this Agreement, all financial information provided
to the Bank and all financial covenants will be made under generally accepted
accounting principles, consistently applied.
11.2 CALIFORNIA LAW.
This Agreement is governed by California law.
11.3 SUCCESSORS AND ASSIGNS.
This Agreement is binding on the Borrower's and the Bank's successors and
assignees. The Borrower agrees that it may not assign this Agreement without the
Bank's prior consent. The Bank may sell participations in or assign this loan,
and may exchange financial information about the Borrower with actual or
potential participants or assignees; provided that such actual or potential
participants or assignees shall agree to treat all financial information
exchanged as confidential. If a participation is sold or the loan is assigned,
the purchaser will have the right of set-off against tire Borrower.
11.4 ARBITRATION.
(a) This paragraph concerns the resolution of any controversies or claims
between the Borrower and the Bank, including but not limited to those
that arise from:
(i) This Agreement (including any renewals extensions or
modifications of this Agreement);
(ii) Any document, agreement or procedure related to or delivered
in connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any business conducted
between the Borrower and the Bank, including claims for
injury to ▇▇▇▇▇▇▇, property or business interests (torts).
(b) At the request of the Borrower or the Bank, any such controversies or
claims will be settled by arbitration in accordance with the United
States Arbitration Act. The United States Arbitration Act will apply
even though this Agreement provides that it is governed by California
law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration.
(d) For purposes of the application of the statute of limitations, the
filing of an arbitration pursuant to this paragraph is the equivalent
of the filing of a lawsuit, and any claim or controversy which may be
arbitrated under this paragraph is subject to any applicable statute
of limitations. The arbitrators will
13
have the authority to decide whether any such claim or controversy is
barred by the statute of limitations and, if so, to dismiss the
arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.
(g) The procedure described above will not apply if the controversy or
claim, at the time of the proposed submission to arbitration, arises
from or relates to an obligation to the Bank secured by real property
located in California. In this case, both the Borrower and the Bank
must consent to submission of the claim or controversy to arbitration.
If both parties do not consent to arbitration, the controversy or
claim will be settled as follows:
(i) The Borrower and the Bank will designate a referee (or a
panel of referees) selected under the auspices of the
American Arbitration Association in the same manner as
arbitrators are selected in Association-sponsored
proceedings;
(ii) The designated referee (or the panel of referees) will be
appointed by a court as provided in California Code of Civil
Procedure Section 638 and the following related sections;
(iii) The referee (or the presiding referee of the panel) will be
an active attorney or a retired judge; and
(iv) The award that results from the decision of the referee (or
the panel) will be entered as a judgment in the court that
appointed the referee, in accordance with the provisions of
California Code of Civil Procedure Sections 644 and 645.
(h) This provision does not limit the right of the Borrower or the Bank
to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal property
collateral; or
(iii) act in a court of law, before, during or after the
arbitration proceeding to obtain: (A) an interim remedy;
and/or (B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrower or the Bank,
including the suing party, to submit the controversy or claim to
arbitration if the other party contests the lawsuit. However, if the
controversy or claim arises from or relates to an obligation to the
Bank which is secured by real property located in California at the
time of the proposed submission to arbitration, this right is limited
according to the provision above requiring the consent of both the
Borrower and the Bank to seek resolution through arbitration.
(j) If the Bank forecloses against any real property securing this
Agreement, the Bank has the option to exercise the power of sale under
the deed of trust or mortgage, or to proceed by judicial foreclosure.
11.5 SEVERABILITY; WAIVERS.
If any part of this Agreement is not enforceable, the rest of the Agreement may
be enforced. The Bank retains all rights, even if it makes a loan after default.
If the Bank waives a default, it may enforce a later default. Any consent or
waiver under this Agreement must be in writing.
11.6 ADMINISTRATION COSTS.
The Borrower shall pay the Bank for all reasonable costs incurred by the Bank in
connection with administering this Agreement.
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11.7 ATTORNEYS' FEES.
The Borrower shall reimburse the Bank for any reasonable costs and attorneys'
fees incurred by the Bank in connection with the enforcement or preservation of
any rights or remedies under this Agreement and any other documents executed in
connection with this Agreement, and including any amendment, waiver, "workout"
or restructuring under this Agreement. In the event of a lawsuit or arbitration
proceeding, the prevailing party is entitled to recover costs and reasonable
attorneys' fees incurred in connection with the lawsuit or arbitration
proceeding, as determined by the court or arbitrator. As used in this paragraph,
attorneys' fees" includes the allocated costs of in-house counsel.
11.8 ONE AGREEMENT.
This Agreement and any related security or other agreements required by this
Agreement, collectively:
(a) represent the sum of the understandings and agreements between the
Bank and the Borrower concerning this credit; and
(b) replace any prior oral or written agreements between the Bank and the
Borrower concerning this credit; and
(c) are intended by the Bank and the Borrower as the final, complete and
exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
11.9 NOTICES.
All notices required under this Agreement shall be personally delivered or sent
by first class mail, postage prepaid, to the addresses on the signature page of
this Agreement, or to such other addresses as the Bank and the Borrower may
specify from time to time in writing.
11.10 HEADINGS.
Article and paragraph headings are for reference only and shall not effect the
interpretation or meaning of any provisions of this Agreement.
11.11 COUNTERPARTS.
This Agreement may be executed in as many counterparts as necessary or
convenient, and by the different parties on separate counterparts each of which,
when so executed, shall be deemed an original but all such counterparts shall
constitute but one and the same agreement.
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Bank Of America
National Trust and Savings Association ▇▇▇▇ Company
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------- -----------------------
BY: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ BY: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
TITLE: VICE PRESIDENT TITLE: SENIOR VICE PRESIDENT
and CHIEF FINANCIAL OFFICER
ADDRESS WHERE NOTICES TO THE BANK ADDRESS WHERE NOTICES TO THE
ARE TO BE SENT: BORROWER ARE TO BE SENT:
LONG BEACH REGIONAL COMMERCIAL ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
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